<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC.  20549

                                  FORM 10-Q

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
        THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended             September 30, 1997                
                               ----------------------------------------------

                                     OR

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
        THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to                      
                               ---------------------    ---------------------


                       Commission file number  0-15070
                                               --------

                          Alpha 1 Biomedicals, Inc.
                          -------------------------
           (Exact name of registrant as specified in its charter)


<TABLE>
<S>                                                <C>
                 Delaware                                           52-1253406                        
-------------------------------------------        ---------------------------------------------------
(State or other jurisdiction of                    (I.R.S. Employer Identification Number)
incorporation or organization)
</TABLE>

                          6707 Democracy Boulevard
                                  Suite 111
                          Bethesda, MD  20817-1129
                          ------------------------
        (Address of principal executive offices, including zip code)

                               (301) 564-4400
                               --------------
             (Registrants telephone number, including area code)


         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                          Yes         X                     No               
                                  -----------------                 ---------

         As of October 31, 1997, 11,977,429 shares of the registrant's common
stock, par value $.001 per share, were issued and outstanding.
<PAGE>   2

                           ALPHA 1 BIOMEDICALS, INC.

                                   FORM 10-Q

                        QUARTER ENDED September 30, 1997

                                     INDEX

<TABLE>
<CAPTION>
                                                                                                      Page No.
                                                                                                      --------
<S>              <C>                                                                                  <C>
Part I.          Financial Information

                 Item 1.  Financial Statements

                          Balance Sheets at September 30, 1997              
                          (unaudited) and December 31, 1996                 
                          (audited)                                                                      3
                                                                            
                          Statements of Operations for the three-           
                          month and nine-month periods ended                
                          September 30, 1997 and 1996 (unaudited)                                        4
                                                                            
                          Statements of Cash Flows for the nine-            
                          month periods ended September 30, 1997            
                          and 1996 (unaudited)                                                           5
                                                                            
                          Notes to Financial Statements                                                6-7

                 Item 2.  Management's Discussion and Analysis of
                          Financial Condition and Results of        
                          Operations                                                                  8-11

Part II.         Other Information

                 Item 6.  Exhibits and Reports on Form 8-K                                              12

Signatures                                                                                              13
</TABLE>
<PAGE>   3
                                                                    Page 3 of 13


                         Part I.  Financial Information

                           ALPHA 1 BIOMEDICALS, INC.
                                 BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                            September 30,     December 31,
                                                                                1997             1996
                                                                                ----            ---- 
                                                                            (unaudited)
<S>                                                                        <C>              <C>
ASSETS
------

Current assets
      Cash and cash equivalents                                            $      4,916     $    153,725
      Prepaid insurance                                                          20,019           61,048
      Other current assets                                                       -                 3,677 
                                                                           -------------    -------------

             Total current assets                                                24,935          218,450

Fixed assets, net                                                                 1,483            6,344
Due from related party                                                           71,871           72,643
Other assets                                                                  -                   15,831 
                                                                           -------------    -------------

             Total assets                                                  $     98,289     $    313,268 
                                                                           =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------

Current liabilities
      Accounts payable                                                     $    210,540     $    165,084
      Accrued expenses                                                          293,468          463,393
      Notes payable                                                              50,000       -
      Letter agreements with vendors                                          1,301,904        1,323,022 
                                                                           -------------    -------------

             Total current liabilities                                        1,855,912        1,951,499 
                                                                           -------------    -------------

Stockholders' equity (deficit)
      Preferred stock, $.001 par value per share,
       1,000,000 authorized; no shares issued                                    -               -
      Common stock, par value $.001 per share,
       20,000,000 shares authorized; 11,977,429 and
        9,102,429 issued and outstanding, respectively                           11,977            9,102
      Additional paid-in capital                                             35,965,289       35,613,164
      Accumulated deficit                                                   (37,734,889)     (37,260,497)
                                                                           -------------    -------------

             Total stockholders' equity (deficit)                            (1,757,623)      (1,638,231)
                                                                           -------------    -------------

             Total liabilities and stockholders' equity (deficit)          $     98,289     $    313,268 
                                                                           =============    =============
</TABLE>


<PAGE>   4
                                                                    Page 4 of 13


                           ALPHA 1 BIOMEDICALS, INC.
                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                       Three months ended             Nine months ended
                                         September 30,                    September 30,        
                                  ----------------------------    -----------------------------

                                      1997            1996            1997          1996
                                      ----            ----            ----          ----
                                          (unaudited)                     (unaudited)
<S>                               <C>             <C>             <C>             <C>
Revenues                          $    114,004    $    254,641    $    168,960    $    266,712

Expenses
     Research and product
      development                       16,234          70,581          70,401         983,225
     General and administrative        165,474         224,125         468,484         712,423
                                  ------------    ------------    ------------    ------------

Total expenses                         181,708         294,706         538,885       1,695,648
                                  ------------    ------------    ------------    ------------

Operating loss                         (67,704)        (40,065)       (369,925)     (1,428,936)
Loss on sale of VTI                          -               -               -         (34,028)
Interest expense                       (35,786)        (34,297)       (105,378)        (97,769)
Interest income                              4             998             911           7,400
                                  ------------    ------------    ------------    ------------

Net loss                          $   (103,486)   $    (73,364)   $   (474,392)   $ (1,553,333)
                                  ============    ============    ============    ============ 

Net loss per common share         $      (0.01)   $      (0.01)   $      (0.05)   $      (0.17)
                                  ============    ============    ============    ============ 


Weighted average number
 of common shares outstanding       11,977,429       9,102,429      10,510,030       9,057,721
                                  ============    ============    ============    ============ 
</TABLE>



<PAGE>   5
                                                                    Page 5 of 13




                           ALPHA 1 BIOMEDICALS, INC.
                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                       Nine months ended
                                                                                         September 30,                
                                                                          --------------------------------------------
                                                                                   1997                    1996
                                                                                   ----                    ----
                                                                                          (unaudited)
<S>                                                                       <C>                     <C>     
Cash flows from operating activities:
     Net loss                                                             $          (474,392)    $        (1,553,333)

Adjustments to reconcile net loss to net
     cash used in operating activities:
         Depreciation                                                                   4,861                  10,134
         Amortization                                                               -                          64,672
         Litigation settlement in common stock                                        105,000                 (60,000)
         Loss on disposal/writedown of fixed assets                                 -                          26,969
         Changes in operating assets and liabilities:
              Decrease in prepaid insurance                                            41,029                  95,272
              Decrease in other current assets                                          3,677                   8,451
              Decrease in due from related party                                          772                   7,866
              Decrease (increase) in other assets                                      15,831                  (1,221)
              Increase (decrease) in accounts payable                                  45,456                (100,130)
              Decrease in accrued expenses                                           (169,925)               (582,478)
              (Decrease) increase in letter agreements with vendors                   (21,118)              1,323,022 
                                                                          --------------------    --------------------

Net cash used in operating activities                                                (448,809)               (760,776)
                                                                          --------------------    --------------------

Cash flows from investing activities:
     Sale of short term investments, net                                            -                         284,538
     Proceeds from the sale of fixed assets                                         -                          13,700 
                                                                          --------------------    --------------------

Net cash provided by investing activities                                           -                         298,238 
                                                                          --------------------    --------------------

Cash flows from financing activities:
     Proceeds from issuance of common stock/warrants                                  250,000                  35,000
     Proceeds from issuance of notes payable                                           50,000               -         
                                                                          --------------------    --------------------

Net cash provided by financing activities                                             300,000                  35,000 
                                                                          --------------------    --------------------

Net decrease in cash and cash equivalents                                            (148,809)               (427,538)

Cash and cash equivalents at beginning of period                                      153,725                 546,797 
                                                                          --------------------    --------------------

Cash and cash equivalents at end of period                                $             4,916     $           119,259 
                                                                          ====================    ====================
</TABLE>



<PAGE>   6
                                                                    Page 6 of 13



                           ALPHA 1 BIOMEDICALS, INC.

                         NOTES TO FINANCIAL STATEMENTS


Alpha 1 Biomedicals, Inc. (the "Company"), a Delaware corporation, was
incorporated in 1982.  The Company operates predominantly in a single industry
segment, the biotechnology industry.  Its business consists of researching and
developing new pharmaceutical products for the treatment of diseases or
conditions that arise as a result of immune system disorders, including chronic
viral infections, cancer and autoimmune disease.

The Company delayed its development program for Thymosin beta 4 during 1996 and
has no products that have received regulatory approval.  The Company has not
generated significant revenues from operations and does not anticipate
generating product revenues for the foreseeable future.  The Company will
require substantial funding in order to resume and conduct its research and
development activities and to manufacture and market the products which the
Company intends to develop.  Management plans to continue to pursue strategic
alliances or other partnership arrangements with entities interested in and
with resources to develop Thymosin beta 4 or products within its business
focus, or other business transactions which would allow the Company to generate
resources to permit continuation of the Company's operations.

During March 1997, the Company completed a private placement in which it raised
$200,000 through the sale of four units, each consisting of 500,000 shares of
Common Stock and 165,000 Class D Warrants having an exercise price of $0.10 per
warrant and a term of ten years.  In June, the Company raised an additional
$50,000 through the sale of one unit on identical terms. The proceeds were used
in part to initiate preclinical animal studies at a major United States
university using the Company's product, Thymosin beta 4, and to fund current
operations.  In July 1997, the Company secured a $50,000 loan from an
individual to provide additional operating capital.  The terms of the loan
agreement provide for repayment of principal and interest within six months
with interest at the rate of 8% per annum.  Additionally, the noteholder
received a warrant to purchase 100,000 shares of the Company's common stock at
$.13 per share.  (The fair market value of the Company's stock at the date of
the grant.)  The warrant has a five-year term.

In 1996, the Company entered into an agreement with SciClone Pharmaceuticals,
Inc. ("SciClone"), whereby the Company received $500,000 in non-refundable
prepayments of royalties that may be due from future sales of Zadaxin(R),
SciClone's tradename for Thymosin alpha 1.  The agreement provided that after
royalty payments totaling $1.75 million have been made, the Company will forgo
future royalties, if and when earned, equal to $2.5 million.  In September
1997, the Company entered into a second agreement with SciClone whereby the
Company received an additional $70,000 in non-refundable prepayments of
royalties that may be due from future sales of Zadaxin(R).  Under the second
agreement, the Company will forgo an additional $700,000 in future royalties
after royalty payments totaling $1.75 million have been made.
<PAGE>   7
                                                                    Page 7 of 13



Under the terms of a promissory note executed in October 1997 with ViroPro
Pharmaceuticals, Inc. ("ViroPro"), the Company received $60,000.  The demand
note, in part, provides for repayment of principal in six months and bears
interest at the rate of 8%.  ViroPro and the Company are having ongoing
discussions regarding the possibility of a future business relationship.

Cash balances at September 30, 1997 were $4,916.  Current cash balances will be
insufficient to satisfy operating requirements beyond November 1997.  In the
event that substantial funding is not obtained, the Company likely will be
forced to discontinue operations.  During 1996, the board of directors approved
a plan which provided for the termination of most ongoing research and
development activities, a reduction of leased space, a reduction of certain
salaries and the severance of administrative staff.  Also, during 1996,
management reached agreements with its major vendors to defer approximately
$1,323,000 in payments that are due in exchange for a commitment to the vendors
to make payments from revenues received by the Company in the future under the
SciClone license agreement until the full amount of the liabilities have been
liquidated.

Should the Company obtain substantial additional funding, other factors
relating to competition, dependence on third parties, uncertainty regarding
patents, protection of proprietary rights, manufacturing of peptides and
technology obsolescence could have a significant impact on the Company and its
operations.

Financial Statements

The Balance Sheet as of September 30, 1997, the Statement of Operations for the
three-month and nine-month periods ended September 30, 1997 and 1996, and the
Statements of Cash Flows for the nine-month periods ended September 30, 1997
and 1996, have been prepared without audit.  In the opinion of the management,
all adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position at September 30, 1997 and the results of
operations and changes in cash flows for such period have been made.  Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted.  These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
December 31, 1996 audited financial statements.  The results of operations for
the three-month and nine-month periods ended September 30, 1997, are not
necessarily indicative of the operating results for the full year.  Certain
prior year amounts have been reclassified to conform with current year
presentation.

Forward Looking Statements

Any statements which are not actual facts contained in this document are
forward looking statements that involve risks and uncertainties, including but
not limited to, those relating to product demand, pricing, market acceptance,
the effect of economic conditions, intellectual property rights and litigation,
clinical trials, governmental regulations, competitive products, risks in
product and technology development, the results of financing efforts, the
ability to complete transactions and other risks identified in other of the
Company's Securities and Exchange Commission filings.
<PAGE>   8
                                                                    Page 8 of 13



                           ALPHA 1 BIOMEDICALS, INC.

Item 2.

          Management's Discussion and Analysis of Financial Condition
                           and Results of Operations

  Results of Operations for the Three-Month Period Ended September 30, 1997
         Compared to the Three-Month Period Ended September 30, 1996


Revenues.  Revenues for the three-month period ended September 30, 1997 were
$114,004 as compared to $254,641 during the comparable period a year earlier.
Current period revenues consisted of royalty payments from SciClone
Pharmaceuticals, Inc. ("SciClone") totaling $89,004 and $25,000 received under
a consulting agreement.  The royalty payments consisted of $70,000 in a
non-refundable payment under a prepaid royalty agreement executed in September
1997 and royalty earnings due for the current quarter totaling $19,004.
Revenues in the comparable period a year earlier consisted of $250,000 in a
non-refundable payment under a prepaid royalty agreement executed in August
1996 and $4,641 in royalty earnings.

Expenses.  Expenses for the three-month period ended September 30, 1997 were
$181,708, a decrease of $112,998 from the comparable period a year earlier.
Research and development expenses during the current period were $16,234, a
decrease of $54,347 from the prior period.  The current period decrease
reflects the effect of a cost reduction program implemented during early 1996,
in addition to higher prior period expenses incurred for the conduct of
pre-clinical studies.  General and administrative expenses during the current
period were $165,474, a decrease of $58,651 from the comparable period a year
earlier, primarily reflecting decreased legal fees for patent activities, and a
reduction in the cost of insurance.

    Results of Operations for the Nine-Month Period Ended September 30, 1997
           Compared to the Nine-Month Period Ended September 30, 1996

Revenues.  Revenues for the nine-month period ended September 30, 1997 were
$168,960 as compared to $266,712 during the comparable period a year earlier.
Current period revenues consisted of royalty payments from SciClone totaling
$118,835 and $50,125 received primarily in fees under a consulting agreement.
Revenues in the comparable period a year earlier consisted primarily of royalty
payments.

Expenses.  Expenses for the nine-month period ended September 30, 1997 were
$538,885, a decrease of $1,156,763 from the comparable period a year earlier.
Research and development expenses during the current period were $70,401, a
decrease of $912,824 from the prior period.  The current period reflects the
effect of a cost reduction program implemented during early 1996, in addition
to higher prior period expenses incurred for the purchase of Thymosin beta 4
material and costs incurred for the conduct of clinical studies.  General and
administrative expenses during the current period were $468,484, a decrease of
$243,939 from the comparable period a year earlier, primarily reflecting the
effect of the cost reduction program, the effect of proprietary rights
<PAGE>   9
                                                                    Page 9 of 13


becoming fully amortized, decreased legal fees for patent activities and a
reduction in the cost of insurance.

Other Items.  During the nine-month period of 1996, the Company recorded a loss
of $34,028 resulting from the sale of shares of CEL-SCI Corporation.  No such
expense was incurred during the 1997 comparable period.

Capital Resources and Liquidity

Since its inception in 1982, the Company's activities have consisted of
conducting research and development, sponsoring clinical trials of its
proprietary products, the construction and equipping of laboratory and
production facilities, and the manufacture of products for research, testing
and clinical trials.  The Company's accumulated deficit of $37,734,889 through
September 30, 1997 has been primarily funded by the proceeds from the issuance
of equity securities (and interest earned on such funds), the licensing of
technology developed or acquired by the Company and limited product sales.

The Company has delayed its development program for Thymosin beta 4, and has no
products that have received regulatory approval.  The Company has not generated
significant revenues from operations and does not anticipate generating product
revenues for the foreseeable future.  The Company will require substantial
funding in order to resume and conduct its research and development activities
and to manufacture and market the products which the Company intends to
develop.

During the first nine months of 1997, revenues consisted primarily of royalty
income from SciClone and payments received under a consulting agreement.  These
revenue sources are substantially below the level required to cover fully the
Company's expenses.  During the first quarter of 1997, the Company completed a
private placement consisting of shares of Common Stock and Class D Warrants
from which the Company received $200,000.  Each unit consisted of 500,000
shares of Common Stock and 165,000 Class D Warrants having an exercise price of
$0.10 per warrant and a term of ten years.  During the second quarter of 1997,
the Company raised an additional $50,000 through the sale of one unit on
identical terms.  The proceeds of this offering were used to conduct
preclinical animal studies at a major United States university using the
Company's product, Thymosin beta 4, and to provide funds for operations.  The
Company was subsequently advised that the animal studies it sponsored failed to
indicate that Thymosin beta 4 may be an effective treatment for sepsis or Adult
Respiratory Distress Syndrome ("ARDS").  During July, the Company secured a
$50,000 loan from an individual to provide additional operating capital.  The
terms of the loan agreement provide for repayment within six months with
interest at the rate of 8% per annum.  Additionally, the noteholder received a
warrant to purchase 100,000 shares of the Company's common stock at $.13 per
share.  (The fair market value of the Company's stock at the date of the
grant.) The warrant has a five-year term.  In September 1997, the Company
entered into an agreement with SciClone, whereby the Company received $70,000
in non-refundable prepaid royalties that may be due from future sales of
Zadaxin(R), SciClone's tradename for Thymosin alpha 1.  Under the agreement,
the Company will forgo future royalties in an amount equal to $700,000, after
royalty payments of $1.75 million have been made.  (In 1996, the Company
entered into a similar agreement with SciClone, whereby, in
<PAGE>   10
                                                                   Page 10 of 13


exchange for a $500,000 payment, the Company agreed to forgo $2.5 million in
future royalty payments on sales of Zadaxin after royalty payments of $1.75
million have been made.)  During October 1997, the Company received $60,000
under a promissory note with ViroPro Pharmaceuticals, Inc.  The demand note, in
part, provides for repayment of principal in six months and bears interest at
the rate of 8%.  ViroPro and the Company are having ongoing discussions
regarding the possibility of a future business relationship.

During the second quarter of 1997, the Company entered into a Material Transfer
Agreement-Cooperative Research and Development Agreement ("MTA-CRADA") with the
National Institutes of Health ("NIH"), whereby the NIH investigator will use
Thymosin beta 4 material provided by the Company in a wound healing study.  In
exchange, the Company may license from the NIH any patent rights that might
result from the research study that relate to the use of Thymosin beta 4 as a
wound healing treatment.

Based on its existing resources, the Company does not have sufficient cash to
sustain its operations beyond November 1997.  If additional financing cannot be
obtained prior to that time, the Company likely will be forced to discontinue
operations.

During 1995, the Company refocused its research efforts to Thymosin beta 4.
Research activities and preclinical studies were initiated and accelerated
based on anticipated cash resources that the Company expected to materialize
through a proposed merger.  In anticipation of the merger and the cash that was
to become available, the Company commenced placing orders for the conduct of
research studies and for the purchase of Thymosin beta 4 material totaling
$2,704,000.  In January 1996, the Company learned of the issuance of a U.S.
patent such that the commercialization of Thymosin beta 4 as a mucolytic for
the treatment for cystic fibrosis would potentially infringe the claims of this
patent.  Following an unsuccessful attempt to obtain a license to this patent,
the merger agreement was terminated by mutual agreement.

As a result of the termination of research and development activities during
1996, the Company canceled research orders with certain vendors.  The Company
was able to cancel approximately $1,200,000 of work on outstanding orders of
approximately $2,700,000.  Management entered into separate letter agreements
with four vendors, which in the aggregate totaled $1,323,000, to defer payment
in exchange for a commitment to the vendors of revenues received by the Company
in the future under a license agreement with SciClone Pharmaceuticals, Inc.
until the full amounts of the liabilities have been liquidated.  In the event
that sufficient funding is obtained for the Thymosin beta 4 program, all
amounts then due would become payable immediately.

The Company continues to pursue strategic alliances or other partnership
arrangements with entities interested in and with resources to develop Thymosin
beta 4, or other business transactions which would allow the Company to
generate resources to permit continuation of the Company's operations.

The effect of inflation and changing prices on the continuing operations of the
Company is not expected to be significant.
<PAGE>   11
                                                                   Page 11 of 13


New Accounting Standards

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").
This statement establishes new standards for computing and presenting earnings
per share ("EPS").  This standard replaces Accounting Principles Board Opinion
No. 15 ("APB 15") presentation of "primary EPS" with "basic EPS," computed as
income available to common stockholders divided by the weighted average number
of common shares outstanding during the period.  SFAS 128 also requires dual
presentation of basic and diluted EPS on the face of the income statement for
entities with complex capital structures.  Diluted EPS is computed similarly to
"fully diluted EPS," as defined in APB 15.  In addition, the statement requires
a reconciliation of the numerator and denominator of the basic to diluted EPS.
SFAS 128 is effective for financial statements issued for periods ending after
December 15, 1997, with early adoption not permitted.  Restatement of all prior
period EPS data is not required.  The Company anticipates that adoption of SFAS
128 will not have a significant impact on its EPS.

In June 1997, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" and
No. 131, "Disclosures about Segments of an Enterprise and Related Information."
These statements are effective for FY 1998.  The Company is evaluating these
statements to determine the impact on its reporting and disclosure
requirements.
<PAGE>   12
                                                                   Page 12 of 13



                           ALPHA 1 BIOMEDICALS, INC.

                          Part II - Other Information

Item 6.          Exhibits and Reports on Form 8-K

                 (a)      Exhibits

                          Exhibit
                          Number
                              27           Financial Data Schedule

                 (b)      No reports on Form 8-K were filed during the quarter
                          ended September 30, 1997.
<PAGE>   13
                                                                   Page 13 of 13



                                   SIGNATURES




         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                                            (Registrant)
                                                   Alpha 1 Biomedicals, Inc.
                                                   -------------------------





Date: November 7, 1997                     By:     /s/  R.J. Lanham           
                                              --------------------------------
                                                   R.J. Lanham
                                                   Vice President and
                                                   Chief Financial Officer